Cracker Barrel Old Country Store, Inc. Earnings: Will the Restaurant Keep Climbing?

On Wednesday, Cracker Barrel Old Country Store (NASDAQ: CBRL) will release its quarterly report, and many believe that the hybrid restaurant/retail stock will keep its earnings growth at impressive levels. Given mixed performance from restaurant peers Darden Restaurants (NYSE: DRI) and Buffalo Wild Wings (NASDAQ: BWLD) , Cracker Barrel has to make sure that it can outperform its rivals to hold activist investors at bay.

Cracker Barrel has an unusual business model. Unlike Darden, Buffalo Wild Wings, and most other restaurant chains, Cracker Barrel spends a lot of effort on gift shops connected to its dining establishments, seeking to supplement its income from travel-weary customers looking to take a longer break from their trips. Will that strategy successfully produce growth, or are critics right to believe that Cracker Barrel could do better by focusing more on its restaurant business? Let's take an early look at what's been happening with Cracker Barrel Old Country Store over the past quarter and what we're likely to see in its report.

Stats on Cracker Barrel Old Country Store

Analyst EPS Estimate

$1.22

Change From Year-Ago EPS

19.6%

Revenue Estimate

$642.87 million

Change From Year-Ago Revenue

0.4%

Earnings Beats in Past 4 Quarters

3

Source: Yahoo! Finance.

What's next for Cracker Barrel earnings?In recent months, analysts have downgraded their views on Cracker Barrel earnings, cutting almost 5% from their April-quarter estimates and reducing full-year fiscal 2015 projections by about 3%. The stock has held its own, though, rising 2% since late February.

Cracker Barrel's previous quarterly results showed some of the headwinds that have hit the restaurant industry lately. Tough winter weather reduced the amount of travel people were willing to do, and that hit Cracker Barrel's results. Same-store sales fell 0.6% on the restaurant side of the business and 3% for retail. Yet the company kept its full-year earnings guidance unchanged and still expects comps for the year to come in between 1% and 2% higher.

One interesting move that Cracker Barrel has made recently is to revamp its menu. That's something that competitors have done in the past with mixed success, but for Cracker Barrel, the move is important in order to fight the perception that health-conscious diners won't find food they want at Cracker Barrel locations. So far, it appears that the impact has been neutral to positive, proving the benefit of seeking to expand Cracker Barrel's audience.

Still, perhaps the biggest news for Cracker Barrel came from investors. For a long time, activist investor Sardar Biglari has wanted Cracker Barrel to pay a huge special dividend and even sell the restaurant chain entirely. But apart from Biglari himself, more than 90% of shareholders voted against his most recent proxy-vote proposals, marking the fourth straight time that investors have chosen not to follow the activist-investor path and instead having confidence in Cracker Barrel management.

In the Cracker Barrel earnings report, watch to see how continuing poor weather affects the company going forward. The real key is whether Cracker Barrel sees the current quarter as improving, because now that winter's over, it won't be an excuse that Cracker Barrel can use to justify poor results from here on out.

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